Minister fettered her discretion by undue reliance on T2 Statute-barred Credits Guide

Federal court | Tax | Income tax | Administration and enforcement

Taxpayer, which was commercial and residential painting business, did not file corporate income tax returns for two taxation years. Canada Revenue Agency (CRA) issued notional assessments for those taxation years, including penalties, and proceeded to collect balance owing by way of garnishment. After garnishments, taxpayer hired accountant to file outstanding T2 tax and taxpayer reported net income which resulted in net tax owing being less than garnished amounts, difference which represented statute-barred credit (SBC). Taxpayer made two requests to Minister to re-appropriate SBC to their outstanding payroll balance, but Minister denied requests, because amount was not compliant and taxpayer did not resolve non-compliance within reasonable time. Taxpayer brought application for judicial review of Minister’s decision to deny taxpayer statute-barred credits. Application dismissed. It was found that decision of Minister’s delegate was not reasonable. When assessing request for re-apportionment of SBC, Minister should also have regard to whether denial of request might possibly result in Minister’s inability to collect outstanding tax arrears from taxpayer. Taxpayer had filed affidavits that stated that Minister’s continued denial of taxpayer’s request to apply existing tax credits to current arrears caused significant financial hardship. Accordingly, Minister’s decision was unreasonable because it was not apparent or transparent that taxpayer’s financial hardship was factor in decision-making process. Minister fettered her discretion by undue reliance on T2 Statute-barred Credits Guide, because she did not review or weigh as factor financial hardship raised by taxpayer. Matter was returned for redetermination by different delegate of Minister and taxpayer was awarded costs in amount of $1,000.

Forbes Painting and Decorating Ltd. v. Canada (Attorney General) (2019), 2019 CarswellNat 265, 2019 CarswellNat 760, 2019 FC 160, 2019 CF 160, Keith M. Boswell J. (F.C.).

Free newsletter

Our daily newsletter is FREE and keeps you up to date on all the developments in the Ontario legal community. Please complete the form below and click on subscribe for daily newsletters from Law Times.

Recent articles & video

Open schedule at Competition Tribunal presents opportunity for commissioner, lawyer says

Students raise alarm on future of university legal clinics

CICB to cease accepting applications on Oct. 1

Stikeman Elliott, Rubin Thomlinson, McCarthy Tétrault win HR awards

Insurance lawyers reveal their referral philosophies

Court of Appeal rules auto insurer not liable for parental negligence claim stemming from accident

Most Read Articles

New equality measure approved by Law Society of Ontario as the statement of principles gets repealed

Judges call out lack of support for legal aid, pro bono amid MAG presence

Chasm in opinions remains after statement of principles repeal

Law students, paralegals can continue working on the same summary conviction matters